Logistics And Frieght Forwarding

Rail link turns Chengdu into a logistics hub

AN international railway connecting Chengdu with Europe is becoming a new driving force for economic and trade exchanges between China and European countries, turning the southwest Chinese city into a major logistics hub and a national major city. Launched in April 2013, the Chengdu-Europe Express Rail is a freight train that passes through Alataw Pass in the Xinjiang Autonomous Region and crosses Kazakhstan, Russia and Belarus before arriving in Lodz in Poland. Nuremburg in Germany and the Dutch city of Tilburg have been added to the line.

Spanning a total length of nearly 10,000 kilometers, it takes 10 and a half days for the express to reach Poland and 14 days to arrive in Germany and the Netherlands. That is just about one third of the time taken by traditional shipping routes and about one fourth the cost of air cargo. “Chengdu-Europe Express Rail is an alternative to shipping and air cargo,” said Zhang Chi, deputy director of Chengdu Port and Logistics Office. “It’s suitable for transportation of products that is relatively time-sensitive and have high added values.”

Since it started operation, nearly US£800 million worth of goods have been transported via the freight rail, mostly IT products, automobile parts, household appliances, apparels, industrial products and daily necessities. The express departs from Chengdu International Railway Port in Qingbaijiang District, where goods from Chengdu as well as other cities including Shanghai, Guangzhou, Shenzhen, Xiamen, Ningbo, Kunming and Wuhan are loaded. “We have diversified freight sources as a strong railway network with domestic cities makes Chengdu a logistic center,” Qiu Jinmei, an official with the Administration Committee of Chengdu International Railway Port.

“More and more companies from Taiwan plan to export their products through Chengdu to Europe,” Qiu said. In March, AOC International, a multinational electronics company headquartered in Taipei, started to use the route to deliver electronic products such as monitors to Europe. The railway’s other major clients range from manufacturers such as TCL, Dell, Philips and Molex to logistics companies like DHL, UPS and COSCO Logistics.

Chengdu-Europe Express Rail also provides return services, bringing a variety of products from Europe back to Chengdu. “Chengdu has a large consumer market with great demand for imported goods, which supports the demand for return services,” said Qiu. Imported goods through the express have been expanded from consumer goods such as liquor, cookies, coffee, chocolate and milk powder to frozen meat and automobiles.

In February 2015, Chengdu International Railway Port has got the nod to import vehicles, paving the way for high-end automobiles to be transported via the express. In July, the first batch of automobiles from Germany arrived in Chengdu after travelling for 15 days. Previously, imported cars from Europe used to be shipped to Tianjin before they were sent to Chengdu by railway.

The whole process would take around two months. With the fast track provided by the express, demand for cars is expected to soar in Chengdu, which is already China’s second-largest city for private car ownership. The express is part of the “Chengdu-Europe Plus” strategy, which is in line with China’s “One Belt and One Road” initiative.

The strategy aims to accelerate the construction of an international logistics system — two ports and three networks — that includes the international airport, international railway, road logistics network, air logistics network and air passenger network in Chengdu. It strives to develop inland Chengdu into a port city and a pivot for logistics to facilitate bilateral economic and trade relations between China and European countries. Under the strategy, Chengdu will build a logistics network, linking the Yangtze Economic Zone, Europe and Asia.

It will extend its connections with more domestic coastal and river cities as well as more logistics hubs in Europe such as Moscow and Istanbul. The scope of the network will be further expanded through intercity railways, highways and airways to reach more central regions. Chengdu is also banking on the international express to boost its appeal among investors.

“Logistics is a part of the investment environment, which requires government efforts to improve,” said Zhang of Chengdu Port and Logistics Office. “We hope the international express will attract companies to move their production capacity to Chengdu and in turn boost the use of the railway.” Based on the logistics network, Chengdu is striving to build a cluster of industries involving logistics, trade and manufacturing. The Chengdu-Europe Express Rail is offering preferential freight rates for enterprises that have set up production facilities in Chengdu.

Trade companies that export goods to Europe through Chengdu customs can also avail of preferential freight rates. Earlier this year, Lenovo (Beijing) Limited signed an agreement with Chengdu Port and Logistics Office to use the railway express to transport some of its products to Europe, while Lenovo also agreed to gradually expand its production capacity in Chengdu. Zhuhai-based Gree Electric Appliances Inc also chose Chengdu as its production base for green energy vehicles after China’s largest maker of home air-conditioners made its foray into the fast-growing electric car market with its 13 billion yuan (US£2 billion) acquisition of Zhuhai Yinlong New Energy Co Ltd.

Covering an area of 2 square kilometers, the park will serve as a production base of lithium titanium oxide batteries, new-energy vehicles and charging equipment. On August 20, Gree signed an agreement with the Tianfu New Area to build a new energy industry park with an investment of 10 billion yuan. Gree President Dong Mingzhu said the company will set up more projects in Chengdu to actively participate in the city’s “Chengdu-Europe Plus” strategy and step up export processing businesses to regions and countries along the “One Belt and One Road.”

Chengdu is expanding the frequency of the express. In the first eight months this year, 238 trips were made by Chengdu-Europe Express Rail that delivered 19,518 TEUs. According to the city’s plan, the express rail will make 400 trips this year, up from 103 last year.

The express rail is expected to make 1,000 trips in 2017 and 2,000 in 2018.

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